GST anti-profiteering body cracks down on McDonald’s, 4 others

The GST anti-profiteering body has begun crackdown, serving notices on at least five companies, for allegedly not passing benefits of rate cuts or input tax credit to customers.

The GST anti-profiteering body under the revenue department has sent notices to five entities, including McDonald’s franchisees and two other entities, including retail shopping outlet Lifestyle International, for allegedly not passing the benefit of cost reduction to consumers.

The Directorate General of Safeguards (DGS) had last week served notices on the franchisee of McDonald’s family restaurant, Hardcastle Restaurant, for the price of its ”McCafe Regular Latte”, Hindustan Unilever distributor for not passing on the GST rate cut on a bottle of Vaseline, and a Honda Car dealer.

The DG Safeguards issued notice to Jaipur-based Sharma Trading for allegedly charging 28 per cent GST on Vaseline when the tax rate had been slashed to 18 per cent.

The Bareilly-based car dealer was accused of allegedly charging higher taxes when a Honda car booked in April but was delivered in July, after GST had been implemented.

The entities have been given time till 12 January to file their reply to the notice stating reasons for not passing on the benefit of reduction in tax rate or input tax credit to consumers by way of commensurate reduction in prices.

In November last year, the government formed National Anti-profiteering Authority under the GST after it found out that benefits were not being passed on to customers.

The GST Council, at its 23rd meeting, had reduced GST rates on as many as 178 items and asked companies to pass the benefit to customers. The GST Council also reduced rates on all restaurants to 5%, and withdrew input tax credit (ITC) benefit after it was found that the restaurants were not passing this benefit to customers as well.

Despite the rate cut, fast-food chains continued to hike their menu prices, saying that the withdrawal of ITC was causing them losses. The real reason why restaurants, fast food chains raised menu prices after GST rate cut explained why ITC was never meant for restaurants but for customers.

According to the anti-profiteering rules, the authority will suggest the return of the undue profit earned from not passing on the reduction in tax to consumers along with an 18 per cent interest as also impose a penalty.

The companies have been asked to provide copies of balance sheets, profit and loss account statements for 2016-17, GST returns for July-December, details of invoice-wise outward taxable supplies, two sample invoices for sale and purchase of goods each and price list before and after 15 November.

The anti-profiteering clause in the GST allows consumers to complain against companies not passing on the benefits of reduced rates or input tax credit.

The notice issued to Pyramid Infratech has said that 36 buyers have accused the builder of not passing on the benefit of input tax credit to them, which would have lowered the total consideration for flats booked under the Haryana Affordable Housing Scheme.

In all cases, the complaints have been vetted by the standing committee on anti-profiteering, for which a penalty has been prescribed in the law to ensure that sellers pass on the benefits of lower taxes to consumers or do not overcharge tax. All the entities have been asked to submit documents and replies.

Source:http://www.domain-b.com/companies/companies_m/McDonald/20180102_crackdown.html

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